Thomas Müller has been one of the stars of this World Cup. Photograph: Pierre-Philippe Marcou/AFP/Getty Images

As English football looks to come to terms with another tournament failure, the head of Germany's Bundesliga has detailed how his country overhauled its failing youth football structures in the wake of Germany's "horrible" Euro 2000 performances.

Christian Seifert, the Bundesliga's chief executive, told Observer Sport how that failure, which followed a 3-0 quarter-final defeat by Croatia in the 1998 World Cup, forced a major rethink about the development of young players.

The new structure, implemented in 2002, has resulted in a resurgent German side - their youngest team ever, with an average age of 24.7 years. Last Sunday in South Africa they beat England 4-1, and Argentina 4-0 yesterday. They will go into Euro 2012 in Poland and Ukraine among the favourites.

Seifert said that the national team's stark improvement was a direct result of the overhaul of Germany's academy system, with all 36 clubs in the two Bundesliga divisions now obliged to operate centrally regulated academies before being given a licence to play in the league. Of the 23-man national squad now in South Africa, 19 came from Bundesliga academies, with the other four from Bundesliga 2 academies.

The most significant change, said Seifert, was insisting that in these new academies at least 12 players in each intake have to be eligible to play for Germany.

"That was the key difference," he said. "Fifa's 6+5 rule means only that players must have grown up in the club. For example, Cesc Fabregas was developed at Arsenal, but is Spanish. In Germany, our academies must have 12 in each group able to play for Germany."

Since that restructuring, the proportion of Germany-qualified players in the Bundesliga has changed significantly.

"In 2003-4 we had 44% from foreign countries," Seifert said. "Right now it is only 38%. So 62% are able to play for the national team." In England it is the other way around, with an approximate 60/40 split of foreigners and nationals.

Seifert emphasised that essential to the system's smooth operation was the unity between clubs and the German FA, achieved in part through the stipulation that no single entity can own more than 49% of a Bundesliga club.

"This way you don't have a foreign owner who doesn't really care for the national teams," said Seifert. "The clubs have a very strong relationship with the FA: we are all engaged in discussions [about youth development]."

That is in stark contrast to England, where infighting between the FA, the Premier League and the Football League resulted in the Professional Game Youth Development Group being disbanded last year after just a year of operation. Since then, no single body has been in control of youth development in England. Instead, the power has rested with Premier League clubs.

Seifert stated that the German system costs clubs "only euros 80m" of the Bundesliga's euros 2billion turnover. The German structure only takes boys into the academy system from the age of 12, with around 5,000 players going through the system at any one time.

English clubs currently spend more, around euros 95m per season, and put 10,000 boys aged between nine and 16 through a much-criticised structure designed by Howard Wilkinson in 1997. About 1% of boys who join an English academy aged nine become professional footballers.

England reached the European Under-21 Championships final last summer, but failed to qualify for seven of the previous 10 tournaments, and England's teams at senior and youth level have failed to win any major trophies since the academy system was established.

Speaking last week, former sports minister Richard Caborn called for radical change. "We can't just deal with the symptoms, we have to get to the root of the problem. English football and the Premier League have to come together to develop young English players."